C.A. 1st;
A146901

The First Appellate District reversed a judgment and remanded. The court held that a water district's conveyance rates may include a portion of the district's pro rata share of capital and operating costs associated with its use of the State Water Project.

In 2003, Metropolitan Water District of Southern California entered into an agreement with the San Diego County Water Authority that allowed Metropolitan to take water allocated to the Water Authority from the Colorado River in exchange for delivering water to the Water Authority from Northern California. The Water Authority agreed to pay conveyance charges at rates set by Metropolitan, but reserved the right to contest any rate if contrary to “applicable law and regulation.” Metropolitan's conveyance rates had three components: (1) a “system access rate” to recover the capital, operating, and maintenance costs associated with its use of the State Water Project and Colorado River Aqueduct; (2) a “system power rate“ to recover the cost of pumping water through the State Water Project and Colorado River Aqueduct to Southern California; and (3) a “water stewardship rate” to recover the costs of conservation programs and other water management programs that reduced and deferred system capacity expansion costs. In 2010 and 2012, the Water Authority filed suit challenging Metropolitan's transportation rates.